How to Write Terms and Conditions for Your Business

Terms and conditions are the written rules that govern how you do business with your customers. In one sentence: they are the contract that sets out what you provide, what the customer pays, and what happens when something goes wrong. Done well, they prevent disputes, protect your cash flow and make your business look professional. Done badly — or not at all — they leave you arguing about expectations you never agreed in writing.

Plenty of small business owners treat terms as a box to tick, lifting a template off the internet and hoping for the best. That is a mistake. Your terms are one of the few documents that decide who wins when a deal sours. This guide explains what they should cover, the clauses that matter most, and how to get them right without spending a fortune. It is general information, not legal advice; for high-value or unusual arrangements, get a solicitor to check the wording.

What terms and conditions are

Terms and conditions (often shortened to "T&Cs") are the set of clauses forming the contract between your business and the people who buy from you. They sit alongside, but are distinct from, a privacy policy: terms cover the commercial deal, while a privacy policy explains how you handle personal data. Most businesses need both.

A contract does not have to be a single formal document signed in ink. In law, it forms when one party makes an offer, the other accepts, something of value (the "consideration") is exchanged, and both intend to be bound. Your terms simply spell out the detail of that bargain so neither side has to rely on memory or goodwill.

Why bother writing them

The case for proper terms is practical, not theoretical:

• They set expectations. Customers know what they are getting, by when, and on what conditions. Fewer misunderstandings means fewer complaints.
• They protect your cash. Clear payment terms — when invoices are due, what happens if they are late — give you a basis to chase money. This pairs naturally with knowing how to chase late payments before a debt goes cold.
• They limit your liability. Well-drafted clauses cap what you owe if things go wrong, within the limits the law allows.
• They look professional. Buyers, and especially other businesses, take you more seriously when your paperwork is in order.

If you are at the start of your journey, terms should be part of your launch checklist — see our guide to how to start a business in the UK for where they fit.

The clauses that matter most

Every business is different, but a solid set of terms usually covers the following.

Two clauses deserve special care. Payment terms should be unambiguous: a specific due date ("within 30 days of invoice"), the consequences of late payment, and your right to charge statutory interest. Liability clauses must be reasonable — courts strike out attempts to exclude liability for things the law says you cannot, such as death or personal injury caused by negligence.

Selling to consumers vs selling to businesses

This is the single most important distinction, because it changes what you are allowed to do.

When you sell to consumers (individuals buying for themselves), a thick layer of statutory protection applies that you cannot contract out of. The Consumer Rights Act 2015 requires goods to be of satisfactory quality, fit for purpose and as described, and services to be carried out with reasonable care and skill. Any term trying to take those rights away is simply void. For online and distance sales, customers also generally get a 14-day cooling-off period to change their mind, and you must give certain information before the sale — the rules are summarised on GOV.UK.

When you sell to other businesses (B2B), the law assumes both sides can look after themselves, so you have far more freedom to agree terms — including tighter limits on liability and no automatic cooling-off period. The trade-off is that the other business will often want to negotiate, or impose its own terms.

A practical tip: if you serve both, consider two versions of your terms, clearly labelled, rather than one document trying to do both jobs.

Avoiding unfair terms

Even in B2B, and especially in consumer contracts, terms that are unreasonably one-sided can be unenforceable. The Competition and Markets Authority polices unfair terms and has published detailed guidance. Watch out for:

• Hidden or surprising clauses buried in dense text.
• Terms that let only you change the deal, cancel, or keep the customer's money.
• Excessive cancellation charges that bear no relation to your actual loss.
• Anything that strips a consumer of statutory rights.

The safest test is the one a court would apply: is the term clear, balanced, and brought properly to the customer's attention? If you would be embarrassed to read a clause aloud to a customer, rewrite it.

Making your terms actually binding

A beautifully drafted set of terms is worthless if it never formed part of the contract. To make terms stick:

• Show the terms before the customer commits, not after payment.
• Get active agreement — an unticked checkbox saying "I accept the terms" beats a passive link in the footer.
• Keep a record of which version the customer agreed to, and when.
• Flag any unusual or onerous clauses clearly, so they cannot claim surprise.
• Review and update terms as your business changes, and date each version.

For online sellers, the moment of agreement is usually the checkout. Make sure the terms are genuinely accessible there, not three clicks away.

When to use a template and when to pay for advice

Templates from reputable sources — trade bodies, established legal sites, GOV.UK guidance — are a perfectly good starting point for a straightforward business. The danger is treating them as finished. A template written for a software firm will not fit a building contractor; a generic refund clause may clash with consumer law.

Spend money on professional advice when the stakes are high: large contract values, bespoke or high-risk work, unusual liability exposure, or anything involving protecting a business idea or other people's intellectual property. The cost of an hour with a solicitor is trivial next to the cost of a dispute you lose because a clause did not hold up.

The bottom line

Terms and conditions are the contract that defines your relationship with customers — covering what you provide, price and payment, cancellation, liability and how disputes are settled. Write them to reflect how you actually trade, respect the statutory rights consumers cannot sign away, keep them fair, and make sure customers agree to them before money changes hands. A template is a fine starting point, but tailor it, date it, and get high-value wording checked. Solid terms will not win you customers, but they will protect you on the day a deal goes wrong — which is exactly when you will be glad you wrote them properly.